Two big meetings are happening this week. Why do we care? Because there’s a lot of money – and our future – at stake.
The first is a meeting of all the heads of the EU member states, who are getting together to discuss the EU’s economic response to the Covid-19 crisis, and the EU’s joint budget for the next seven years.
The second is a meeting of all the finance ministers and central bank governors from the world’s biggest economies – the G20. In both meetings, leaders are going to be talking about how to spend trillions of dollars – unimaginably large amounts of money. Some of that money comes from taxes. Some will be borrowed. A huge chunk of it is coming from central banks – like the European Central Bank.
The obvious question is: where will all the money go?
There is a huge opportunity here, and an equally huge risk. If our leaders choose to grasp the opportunity, then they can tackle multiple crises at once. The trillions of dollars that are being allocated for economic recovery can be used to create decent jobs, to invest in essential public services, and to rapidly accelerate the shift away from fossil fuels.
If they fail to do so though, and decide instead to use public money to keep a broken system on life-support, then we’ll see inequality rising to ever more obscene levels, within and between countries, and the climate crisis spiralling out of control.
A lot of these spending decisions sit with governments, but the central bankers in the room are hugely influential too. They like to claim that they operate independently of governments – but the fact that they’re all attending the same meeting is a useful reminder that their different areas of responsibility are actually closely entwined. For example, if governments say that they want to invest significantly in renewable energy, central banks can commit to providing the funds needed for them to do that.
A lot of the money that central banks are pumping into the economy is going directly to companies, rather than to governments. So far, the European Central Bank hasn’t imposed any criteria on which kinds of companies can and can’t benefit from this – which means that some of the world’s most destructive businesses, companies such as Shell and Total, are receiving public money. As the regulator of the financial sector, central banks also have a key role to play in steering the activities of commercial banks. They can incentivise them to lend money to sustainable businesses, and make it more difficult for them to lend to the big polluters.
— 350.org Europe (@350Europe) July 8, 2020
That’s why it’s so important that we keep up the pressure on central banks, while also calling on governments to deliver a global Green New Deal. History will be a harsh judge on these leaders if they fail us in this moment.